The Police Power and the Regulation of Medical Practice: A Historical Review and Guide for Medical Licensing Board Regulation of Physicians in Erisa-Qualified Managed Care Organizations

Abstract

This article addresses the state regulation of the practice of medicine in ERISA-qualified MCOs through the use of the police power to license and regulate the practice of medicine. The author's thesis is that the most dangerous abuses of MCOs have a common pathway in that they involve incentives to physicians to practice substandard medicine and that breaches of medical standards are best addressed by direct oversight of physicians, rather than attacks on MCOs. Such direct regulation also avoids ERISA preemption issues. In support of this thesis, the article begins with a detailed analysis of the history and evolution of the state's police powers as applied to the regulation of the practice of medicine. This is followed by a discussion of current problems with medical care in MCOs and what issues are properly practice of medicine, rather than insurance issues, and how this affects the ERISA preemption analysis. By focusing on the inter-related roles of treating physicians and MCO medical directors, the article demonstrates how regulation of the medical practice aspects of the medical director function can effectively control abusive incentives without running afoul of ERISA preemption of state regulation. In this way, states can assure that all physicians respect their fiduciary duty to patients and adhere to appropriate standards of medical care. By exercising the state police power through licensing boards, states can take a more active role in regulating the practice of medicine and protecting the health of their citizens.